The National Cryptocurrency Association (NCA) has urged the US Treasury Department to strengthen consumer protections under its proposed GENIUS Act regulations, warning that stablecoin holders need clearer safeguards as the new federal framework takes shape.
In comments submitted to Treasury, the NCA called for protections that would allow consumers to redeem, sell, or convert stablecoins if their regulatory status changes, as well as mechanisms to recover stolen funds.
The organization also emphasized the importance of preserving self-custody and peer-to-peer transactions, arguing that consumer protections should not unnecessarily restrict how Americans use digital assets.
The submission comes as regulators prepare to implement the GENIUS Act, the landmark stablecoin legislation signed into law in July 2025.
NCA Wants Stronger Protections for Stablecoin Holders
The NCA’s recommendations focus on ensuring that consumers are not unexpectedly disadvantaged when new stablecoin regulations take effect.
One central concern involves stablecoins that lose their permitted regulatory status under the forthcoming framework.
The association wants holders to have sufficient time to redeem, sell, or convert their tokens, rather than face immediate restrictions that could render their funds inaccessible.
Such protections could become particularly important for consumers holding stablecoins issued by companies that fail to meet new US regulatory requirements.
The NCA also called for mechanisms to return stolen stablecoins to victims, highlighting the challenges consumers face when funds are transferred through blockchain networks.
However, implementing recovery procedures could prove complicated, particularly for decentralized transactions and assets held outside custodial platforms.
Another priority is protecting self-custody, which allows individuals to control their digital assets without relying on intermediaries.
The association argues that peer-to-peer stablecoin transfers should remain available as regulators establish new compliance requirements.
Its recommendations reflect a broader concern that rules designed to protect consumers could inadvertently limit their ability to access and control digital assets.
Blockchain Association Pushes Back Against Regulatory Overreach
The NCA is not alone in seeking changes to Treasury’s proposal.
The Blockchain Association submitted a separate comment letter on Oct. 19, supporting the government’s broader objectives while requesting narrower definitions and clearer compliance obligations.
The organization wants Treasury to clarify which companies qualify as digital asset service providers.
It argues that self-custody software providers, blockchain validators, and firms trading their own assets should not automatically be subject to obligations intended for businesses that provide services to customers.
The group also raised concerns about criminal liability associated with unlawful stablecoin issuance.
It recommended limiting liability to cases involving actual knowledge and substantial assistance, rather than potentially capturing ordinary secondary-market transactions.
Foreign stablecoin issuers represent another area of disagreement.
The association wants platforms to be able to rely on official regulatory information rather than conduct extensive independent investigations into overseas issuers.
It also questioned how geographic restrictions could operate in decentralized environments where participants may interact only through blockchain addresses.
The requests illustrate the industry’s effort to distinguish regulated financial intermediaries from decentralized infrastructure.
GENIUS Act Implementation Approaches January 2027 Deadline
The Treasury proposal, published on Aug. 18, seeks to implement Section 3 of the GENIUS Act, establishing restrictions on who may issue, offer, and sell payment stablecoins in the US.
The legislation creates a federal regulatory framework requiring payment stablecoin issuers to operate under appropriate federal or qualifying state supervision.
Its implementation is scheduled for Jan. 18, 2027, or 120 days after relevant federal regulators finalize implementing rules, whichever comes first.
Other agencies are developing complementary regulations.
The Federal Reserve published its own proposal in September, addressing supervisory responsibilities and requirements for entities under its jurisdiction.
That consultation remains open until Nov. 30.
Meanwhile, Treasury’s Section 3 proposal attracted more than 100 public submissions during the consultation period.
For stablecoin issuers and cryptocurrency platforms, the final regulations will determine how the industry’s compliance obligations operate in practice.
For consumers, the consequences could be equally significant.
The NCA’s recommendations highlight an unresolved challenge: ensuring stablecoins become safer and more widely accepted without undermining the flexibility, accessibility, and individual control that helped drive their adoption.
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